Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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TS,
Agree .... well put.
All the points you just raised ( along with numerous others ), I too made many, many months ago to support my case for selling. If us plebs can see the roadblock ahead, I would have hoped our board have too .... we shall see, unless of course they want to continue in their own best interest rather than that of the owners, us shareholders.
Agree +300p/s should be easily achievable esp to a PE backed outfit.
atb
aimo & dyor
Agree with what you said NKOTB however you have omitted that this is not a fashionable industry, the environmentalists are against us and every natural disaster is blamed on the use of fossil fuels with fingers pointing in our general direction. We are shunned by many Investment funds as a result. With our recent high commodity prices there will be increasing public pressure to ensure windfall taxes are imposed. These are significant headwinds that I believe are undoubtedly stifling our share price at the moment, these are not going away any time soon.
I think the board should sell our cash cow, as previously noted there are many private equity outfits that will be based in tax havens that will have no concerns regarding the environmental headwinds. Sell to somebody that can milk what we have and give us fair value for our assets £3++ per share. AIMO.
Market may say no today, but the penny will drop.............. Obviously the sp is too low IMHO.
So we have :
Serica's total cash resources of £218.4m, or around ~35% of current Mcap
Production at ~30kboepd net (gross @ ~5% UK's gas production)
Full 100% BKR (increase of 66.7% on 2021 for zero capex)
ZERO Debt
Very limited decom liabilities
Against the backdrop of:
Brent >$88/barrel (8 year high)
NBP ~$140boe (15 yr average $41boe)
Reduced CapEx for 2022 est at £50m vs £100m 2021
We are adding equivalent ~8% of our Mcap (post OpEx/CapEx/Hedging) monthly to our cash hoard atm.
Possibility we could enter negative EV at some point in Q3, although most likely during Q4.
Unbelievable, yet the market says NO !
aimo & dyor
"2021 market gas prices averaged in excess of 113p/th (2020: <25p/th) benefitting Serica’s production, over 85% gas...."
Good to see not too dis-similar to my estimate of 115p/therm average for 2021 .... If we get anywhere close to that average for 2022 it will be magical.
N Eigg drill est cost gross to be £45m, big risk afaic esp as you will probably need to at very least double that to get into production and not before 2024 even if fast-tracked imo. Will, however allow for a re-classification from being a prospective resource if successful. Still no sign of a farm-in partner either.
We are targeting by Q3 additional reserves of around 4mmboe in workovers / well intervention, which if successful equates to replacing around 50% of our estimated 2022 production.
SQZ need a value accretive deal or they need to sell soon imo
aimo & dyor
New KOTB
Thanks. Agreed but interested to see that "investment, acquisiton and distribution" are under active consideration. If there is an acquisition we might move up to the main market. Do you have a preference?
T
Slip of the key board the 60 should be 40, I know you you know.
So although all invested here knew about the BKR settlement the company said nothing as the date approached, even less when it was passed until now 20 days later and there it is a paragraph tucked away between info about the gas price our hedges and cash balance.
The BKR net cash flow sharing arrangements came to an end on 31 December 2021. From 1 January 2022, we enter a new phase for the Company where we will be retaining 100% (2021: 60%) of the net cash flow from the BKR fields, benefitting fully from the recent increase in production levels
If this news was oh by the way we have just successfully drilled three new wells they came in under budget and our production has increased by 60% the market reaction would be going crazy, as it is we trading lower than December last year you couldn't make this stuff up.
As I often see written on many boards, which are out and out gambles and hoping for the best, I wouldn't want to be out of this over the weekend.
What a great RNS .
The anticipated N Eigg "Exploration well capital costs estimated at approximately £45 million (gross)" If they can keep to this and with the money pouring in I think its definitely worth a throw of the dice. Although it would be nice to have a few more details like a Chance of Success! If it comes in there are so many knock on benefits in addition to any reserves/production uplift.
So, I was only £11.6m adrift of my estimate ...... As expected cost for both R3 and Columbus accounted for a significant reduction in our EoY cash to the tune of >£100m. Once more in a way happy for this to off-set any proposed windfall tax, also makes us even cheaper to acquire now, esp as all the 'heavy lifting' in terms of getting these wells on-line has been completed. Someone else can reap the benefits should they so wish !
Finally, news on N Eigg and our rig name .... "Transocean Paul B. Loyd Jr". Note that the drill has now been moved back from anticipated Summer 2022 to Q3 2022.
All in all, RNS was nothing mind-blowing, just as expected, steady as she goes Captain.
aimo & dyor
What a perfect opportunity to buy
I added just now
The hedge makes sure that the prices we get for next 1 year are at current level
If crude goes higher we might lose but they will hedge the following year’s production of it goes any higher
IRT,
"looks like one for the journalists and politicians..."
Agree, hence why, I guess we maybe 'chosen' to allocate "£115.4 million was lodged as temporary security", which will in the world of accounting makes a massive difference for the case of us paying a windfall tax or not as the case maybe imo... ;-)
All the cash that's temporary lodged will in effect be returned during 2022 ( on top or our normalised revenue) unless we are unable to fulfill the swap with actual production. As it's only ~6kboepd, now we have both Columbus and Erskine producing outside of Bruce to balance our production base a little more, should not be an issue.
As you say IRT, definitely an EoY presentation that's one for the jurno's and party goers.
aimo & dyor
Year end update RNS was intended for a wider group of readers this year .. looks like one for the journalists and politicians. In that sense it reads really well, don't think it provides as much information for investors as in earlier years. But journos and politicos can understand Serica better before rushing to conclusions.
"2021 market gas prices averaged in excess of 113p/th (2020: <25p/th) benefitting Serica’s production, over 85% gas."
So far 2022 has averaged >50% more than our average 113p/therm in 2021, plus we now have an extra 66.7% of that too.
Cash build will be amazing during 2022, regardless of how NBP plays out.
aimo & dyor
Mitch Flegg, Chief Executive of Serica Energy, commented:
"2021 was a very busy year for Serica, which reinforced the value of our through-cycle investment strategy as our expenditure during the low gas price environment of 2020 on the R3 and Columbus projects bore fruit this year. The importance of our contribution to the provision of vital lower carbon gas to the UK's energy market was also demonstrated. We will continue to pursue our investment-led strategy this year with a planned well intervention programme on Bruce and Keith in addition to our exploration well at North Eigg. As always, we continue to look for acquisition opportunities that fit our criteria and will add value for our stakeholders."
Production
· With the introduction of R3 and Columbus, Serica's production is now 85% gas, a vital part of the UK's energy mix as we move towards Net Zero. As operator of Bruce, Keith and Rhum, Serica is responsible for over 5% of the UK's gas production. This production has a significantly lower carbon footprint than imported LNG and helps maintain the UK's security of supply
· The Rhum R3 well was put into production in late August 2021 and has boosted total Rhum production significantly, adding up to 6,000 boe/d net to Serica
· First production from the Columbus field was achieved in late November 2021. Early production was initially constrained due to temporary unavailability of full capacity in the export system but average rates of 3,270 boe/d net to Serica were achieved in the period up to year-end
Financial
· Gas prices closed 2021 very strongly, contributing to a market average for the year of over 113p/therm (2020: 25p/therm) with oil also higher, averaging over $70/bbl (2020: $45/bbl)
· This allied to growing production volumes drove Serica's total cash resources to £218.4 million at 31 December 2021 of which £103.0 million was held as cash and deposits (2020: £89.3 million) and a further £115.4 million was lodged as temporary security with gas price hedge counterparties (2020: £1.8 million)
o Security is lodged based on future period gas price hedge valuations and the high year-end level reflected the exceptional gas price spike in December. Surplus security is returned to Serica as forward prices fall and when monthly contracts expire
o Such valuations reflect the impact of high forecast forward prices on hedged production but do not reflect the far greater revenues that would be realised should actual prices match those forward prices
· The BKR net cash flow sharing arrangements came to an end on 31 December 2021. From 1 January 2022, we enter a new phase for the Company where we will be retaining 100% (2021: 60%) of the net cash flow from the BKR fields, benefitting fully from the recent increase in production levels
https://www.lse.co.uk/rns/SQZ/corporate-update-j8uz2wmoqkuvcrv.html
https://www.serica-energy.com/downloads/presentations/2022-Corporate-Presentation-Final.pdf
CoH ........£218.4m .... excellent